More than 62 percent of South Africans own their own home, which is one of the highest home ownership rates in the world, according to Mike Schussler, the chief economist at Economists.co.za.

The home ownership level in South Africa used to be at about 70 percent but at current levels it was still much higher than in Germany, the UK and the US, Schussler told a PayProp and TPN credit bureau conference last week.

But Schussler stressed that many homes owned by South African households were not really private sector assets and might just be "matchbox" houses. About 26 percent of all South African households owned a second property, which was also a very high number, although many were in rural areas and not rentable.

Houses were therefore one of the major assets held by South African households. Almost 10 percent of households relied on renting out a property for their main source of income and another 5 percent received rental from a property as part of their income.

More than 2.9 million households rented the homes they lived in, of which 1.6 million rented formal structures. About 75 percent of households rented their homes for less than R3 000, some of which would be in the formal rental sector. Only about 400 000 houses, or 25 percent of the rental market, was rented for more than R3 000 a month.

The formal rental market comprised an estimated 700 000 homes for which the average rental was R5 178 a month. This had only increased by R6 since February this year.

Residential rentals had only increased by 4.9 percent in the past year, which was the lowest increase in the past two years.

Schussler said times were tough and landlords could not put through the rental increases they used to but rentals were still increasing and should continue to do so.

Rentals were reacting to the economic slowdown in South Africa, he added.

Schussler said the average net return on residential rental properties was now just under 6.3 percent a year, a little higher than putting money in the bank at 5.5 percent.

Owners of rental properties were having to take a huge risk but the market should improve over time.

A key advantage if rental owners bided their time was that there might be capital growth on the property, he said.

Schussler said the residential property market had moved into "a more normal environment" where it took a few years to make money on a house, including from rental income.

This was an indication that house prices were unlikely to "go through the roof " soon because the rental market was essentially the first indication of the return that could be expected from investing in a house, he concluded.

John Loos, a property analyst at FNB, said realism had not quite returned to the residential property market.

The performance of the rental market had been "pretty mediocre", which was a hangover of the massive buy-to-let activity during the past property boom.

It was estimated during this most recent boom that 25 percent of all properties sold were buy-to-let investments but these sales had now dropped to an estimated 9 percent of total residential property sales, Loos said.

"It's a very weak picture. Estate agents have reported a slight uptick (in buy-to-let selling) from 2010 but did not expect this market to go anywhere in the near term," he said.